"Leaving Korea for the U.S. Nasdaq After 27 Years Chasing a Dream" [Listing Regulations That Crush Bio Dreams] ②

Interview with Byungju Kwak, CEO of GNT Pharma
27 Years Devoted to Developing Dementia Treatments
Pursuing Nasdaq Listing Ahead of Phase 3 Clinical Trials

Editor's NoteNew drug development is a race against time and a test of patience. It often takes more than a decade and hundreds of billions of won in investment before any results can be achieved. However, Korean bio startups are being forced into a speed competition lasting only three to five years. In reality, they have no choice but to rely on the stock market to raise initial funds. If they fail to meet short-term evaluation criteria based on simple figures like operating losses or sales, they are forced out of the market and deprived of their future. This structure is why bio startups, which set out to lead the future of 'K-Bio' with their technological capabilities, end up focusing on 'bookkeeping' and unrelated businesses. Asia Economy examines this phenomenon and its causes, and proposes long-term solutions.

[Listing Regulations That Crush Bio Dreams] ① How Did This Promising Bio Company End Up Selling Bread?

[Listing Regulations That Crush Bio Dreams]② "After 27 Years Chasing a Dream, We're Leaving Korea for the U.S. Nasdaq"

[Listing Regulations That Crush Bio Dreams] ③ Worsening Internal and External Conditions Squeeze 'Bio Seedlings'

[Listing Regulations That Crush Bio Dreams] ④ "R&D Investment Should Be Recognized as an Asset, Not a Cost"

"New drug development is a test of patience. After enduring for decades, it is unreasonable that reality forces us to give up just before achieving our dreams. This must change, don't you think?"

Byungju Kwak, CEO of GNT Pharma, a company developing new drugs for dementia and stroke treatment, made this appeal. He founded GNT Pharma in 1998 and has devoted the past 27 years to new drug development. However, just as he is about to see results, GNT Pharma is now pursuing a listing in the United States, not Korea. This is due to concerns that the company will not be able to secure the necessary funding in time domestically.

Byungju Kwak, CEO of GNT Pharma, is meeting with reporters for an interview on the 12th at the GNT Pharma headquarters laboratory located in Giheung-gu, Yongin-si, Gyeonggi-do. Photo by Donghoon Jung

When we met CEO Kwak on the 12th at GNT Pharma's headquarters in Giheung-gu, Yongin-si, Gyeonggi-do, he said, "We turned our attention to the U.S. Nasdaq to take on the challenge of global Phase 3 clinical trials," and added, "To develop a global new drug, we determined it was right to enter the U.S. market, which accounts for more than 40% of the global market." He continued, "Nasdaq underwriters have the expertise and personnel to understand specialized fields such as stroke, so they can properly recognize the value of our new drug," and "Not only is there an environment where we can be evaluated for our technology even after the initial IPO, but there is also a climate that enables continuous fundraising."

GNT Pharma has signed contracts with local underwriters in the U.S. and begun preparations for a Nasdaq listing. The company is preparing for fundraising in two stages. It expects a market capitalization of $500 million (about 684 billion won) at the time of IPO, and anticipates raising around $50 million (about 68.4 billion won) in the initial round. If, after one year, the market recognizes the company’s technological capabilities and commercialization potential, GNT Pharma plans to secure an additional $200 million (about 273.5 billion won) through further funding, which will be invested in Phase 3 clinical trials.

The confidence that GNT Pharma will succeed on Nasdaq comes from its technological strength. The company already developed 'Jedacure,' a treatment for canine cognitive dysfunction syndrome (dog dementia), and launched it in Korea in 2021. CEO Kwak explained, "In humans, dogs, and cats alike, dementia occurs because the same 'beta-amyloid' protein accumulates in the brain and kills brain cells," and added, "Since we have confirmed efficacy in dogs, we see potential for this drug as a treatment for Alzheimer's disease in humans as well." GNT Pharma is currently negotiating technology transfer agreements with global pharmaceutical companies in the U.S., Japan, and other countries that have recognized the potential of Jedacure.

Byungju Kwak, CEO of GNT Pharma, is being interviewed at the GNT Pharma headquarters located in Giheung-gu, Yongin-si, Gyeonggi-do on the 12th. Photo by Donghoon Jung

The reason GNT Pharma chose to list overseas rather than domestically lies in the limitations of Korea’s technology-based special listing system and the capital market. The technology-based special listing system allows companies to list on KOSDAQ based on their technology, even without sales or profits. However, once listed, the situation changes. Under current KOSDAQ regulations, if a company fails to meet uniform financial requirements after a certain period post-listing, it faces the risk of delisting.

GNT Pharma also determined that fundraising through a domestic listing would be difficult. CEO Kwak said, "Even if we list in Korea, we cannot generate profits immediately within three to five years. Given the structure of this industry, it is inevitable that we will be in the red during that period."

As a new drug development company, CEO Kwak emphasizes the urgent need for long-term policies and investment. As a first-generation bio-venture entrepreneur, his appeal sounded like an earnest suggestion for improving the ecosystem of Korea’s bio industry. He pointed out, "It makes no sense to demand 3 billion won in sales right after listing, when it takes 10 to 20 years to develop a new drug," and added, "Because of the pressure to deliver immediate results after listing, many bio-ventures hastily sign technology transfer agreements for promising pipelines."